How Africa is caught in the governance trap

Despite having abundant natural resources and a young population, 32 of the 46 countries currently classified by the UN as least developed are located in sub-Saharan Africa. Whether a country becomes rich or poor depends, among other reasons, on its institutions, the rules that shape how the economy works and the incentives that motivate people to participate in the formal labour market and pay taxes. Some institutions in sub-Saharan African states are neither robust nor effective enough to foster growth and deliver quality services, as evidenced by poor management of public funds and weak public services in the region.

According to the African Development Bank Group’s “African Economic Outlook 2025”, African countries lose around three percent of their GDP annually due to the misallocation and misuse of public funds. The report shows that, in an average year, Africa loses around $ 90 billion through illicit financial flows, $ 275 billion through profit shifting by multinational corporations and $ 148 billion (or 25 % of GDP) through corruption. A further $ 74 billion in potential savings is lost every year due to high interest rates imposed on African countries because they are classified as high-risk by credit rating agencies.

The World Bank’s 2025 “Africa Country Policy and Institutional Assessment” shows that service quality in sub-Saharan Africa has lagged behind other regions, particularly in terms of human capital development, infrastructure and security. Citizens regularly list poor services among the top problems facing their countries.

Ineffective institutions are not the only governance problem in sub-Saharan Africa. Inclusivity and accountability also remain challenging. This is principally due to weak control mechanisms and a persistent pattern of exclusive power structures in many countries.

Evidence shows that constraints on judicial, legislative and constitutional powers in sub-Saharan Africa have remained largely unchanged over the past three decades. Thirty out of 54 African political leaders have either circumvented limitations on their period in office to stay in power for more than two terms, suspended their country’s constitution after assuming power or face no term-limit restrictions. These practices foster authoritarian politics and exploitative institutions.

A governance system of this nature discourages accountability and spawns development policies that benefit a select few at the expense of the majority, resulting in imbalanced economic outcomes. For instance, the economic growth many sub-Saharan African states achieved between 2000 and 2014 – a period termed “Africa Rising” – was neither sufficient, efficient nor inclusive enough to dramatically reduce poverty.

Furthermore, Freedom House’s report for 2025 shows that 50 % of African countries are not free at all, while 31 % are partially free in terms of political rights and civil liberties. According to the Heritage Foundation’s 2026 Index of Economic Freedom, economic freedom – the ability of citizens to make their own economic decisions without government coercion – is mostly absent in 26 sub-Saharan countries and repressed in 14 countries.

Finally, institutions in sub-Saharan Africa are unable to respond to social expectations and political mobilisation. This is evident in growing protests against broken social contracts and in citizens’ distrust of institutions. In 2022, 7697 demonstrations took place in the region in total, compared to 2188 a decade ago and 359 two decades ago, according to the Armed Conflict Location & Event Data Project.

What can be done?

Governments in sub-Saharan Africa must take action to improve governance by ensuring institutions are inclusive rather than exploitative. This process must begin with governments listening to and acting on the aspirations of the people.

Afrobarometer, a pan-African, nonpartisan survey research network, indicates that the majority of Africans strongly support presidential term limits, even in states that have never had them or have removed them from their constitutions. Young Africans (aged 18–35) demonstrate a rejection of dictatorship (80 %) and military rule (65 %), saying instead that democracy is their preferred form of government (64 %).

Governments in sub-Saharan Africa must therefore push ahead with reforms towards democratic governance. This is particularly important given the recent increase in protests by Generation Z in various African states and the growing number of armed conflicts in the region – 41 % of global armed group activity takes place in Africa. These events are driven by social, economic and political exclusion. A shift towards inclusive governance would be the most effective strategy to address these issues.

Sub-Saharan countries stand to gain significantly from inclusive governance – not only through stronger democracy and greater citizen satisfaction but above all via economic gains. The African Continental Free Trade Area (AfCFTA) dominates discussions across the continent. If fully implemented, it could lift 30 million people out of extreme poverty. However, it will not be able to deliver on this promise without stable governance across the continent. Remittance flows offer another opportunity for development. Better governance would encourage recipients to invest rather than simply consume these funds, bringing about investment-driven growth across the region.

Furthermore, the global financial market currently perceives African countries as having weak governance, which means that they are charged higher interest rates on loans. Today, African countries spend more on debt servicing than on developing their health and education systems. Poor institutions enable illegal financial flows and inefficient spending. Improved governance would reduce debt servicing payments and curb resource leakages. 

While the rest of the world seeks to exploit Africa’s resources – including critical minerals, a growing consumer base and a young workforce – to increase its own prosperity, sub-Saharan Africa must ensure that it takes advantage of these resources itself and invests the profits efficiently in the welfare of its citizens. Without effective and inclusive governance, this will not be possible.

Aimé Muligo Sindayigaya is an economist with nearly 20 years of experience in the financial services industry.
sindaimy@gmail.com